USD Index: Stabilisation around 103.50-104.00 may signal the Fed has curbed Dollar's bearish momentum – ING

The Dollar halted its downtrend but failed to rebound sharply after the FOMC.  The US Dollar Index (DXY) could move back to 105 if it stabilises around 103.50-104.00 in the next two days, economists at ING report.

Fed halts Dollar downtrend

“The modest bearish flattening of the US yield curve after the announcement should now create a less unfavourable environment for the Dollar, and we do see room for some support coming the greenback’s way.”

“There are – however – the usual short-term risks to consider. Thin liquidity and seasonal trends may argue against a sustained Dollar rebound at this stage, and we cannot exclude a hawkish surprise by the European Central Bank today.”

“A stabilisation in DXY around 103.50-104.00 in the next two sessions may be a signal the Fed has indeed curbed the Dollar's bearish momentum and may allow a recovery to 105+ into Christmas.”